US Treasury bonds in demand

Prices were up and yields were down on US Treasury bonds in late morning trading on Wednesday as speculation about possible interest rate cuts in Europe increased the demand for US debt.

In addition, rising oil prices were seen as a possible restraint on economic growth, which would tend to aid bond prices.

A third factor in Wednesday’s price gains was a prediction by one fund manager that the US Federal Reserve might quit raising interest rates when they reach 3.5 percent, earlier than some expectations.

The 10-year Treasury bond was down 5 basis points to a yield of 3.994 percent. The 2-year bond was yielding 3.651 percent while the 10-year Treasury sat at a yield of 4.286 percent.

Prices were up and yields down in the eurozone and the UK as well, again on speculation about possible cuts in interest rates.

In afternoon trading in the UK, the 2-year gilt fell 12 basis points to a yield of 4.161 percent, while the 10-year gilt lost 9 basis points to yield 4.261 percent.

In the eurozone, the 2-year Schatz fell 4 basis points to a yield of 2.026 percent, and the 10-year Bund lost 7 basis points to a yield of 3.147 percent.

In Japan, meanwhile, the 10-year government bond lost 2.5 basis points to yield 1.265 percent on a very small rise in Japanese exports in the month of May.

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